On the Supply Objection to the Gold Standard

Since the gold standard was abandoned in 1971, many people have sought to return to such a standard in order to combat inflation and rein in central banks. Keynesians and others who support fiat currency and central banking present several criticisms of this approach. One of these criticisms is particularly nonsensical, but occurs with increasing frequency: that there is not enough gold in the world to back the quantity of currency in existence, and thus returning to gold would set off a deflationary spiral while destroying several industries that depend on gold. Let us address this question from a scientific standpoint, return to economic matters, and address the claimed effects.

Physical Limits

Let us begin by finding the absolute limit of what gold can do for a monetary system. As the United States dollar is the world reserve currency at the time of this writing, it makes sense to use it as the currency to peg to gold. The smallest unit of gold is the atom, and the smallest unit of dollars is the penny. The most extreme possible case would be to set one penny equal to one atom of gold. What would this look like in practice? Any basic text on chemistry can lead us to the answer. The only stable isotope of gold is Au-197, and its molar mass is 196.967. This means that in about 197 grams of gold, or 6⅓ troy ounce coins of the type minted by many governments and private mints, there will be Avogadro’s constant of atoms, which is 6.022140857×10^23. Setting one penny equal to one atom of gold, this is $6.022×10^21 or $6.022 sextillion easily fitting in one’s hand.

This amount of money is so large that people cannot truly understand it due to the lack of a frame of reference for it. Few people will handle anything beyond millions of dollars at any point in their lives. Large businesses may deal with billions of dollars. The most powerful governments have budgets in the trillions of dollars. According to a History Channel documentary, the dollar value of the entire planet is in the quadrillions of dollars, checking in at $6,873,951,620,979,800, and subtracting Earth’s gold content leaves $6,862,465,304,321,880. As the limit of one penny per atom allows one to hold the current market value of a million Earths in one’s hand, it is clear that science imposes no physical limit to make a gold standard infeasible.

Another useful exercise is to try setting the value of all available gold equal to the value of the rest of the planet. The total available gold content at present amounts to 186,700 metric tons. Defining this amount of gold to be worth the above figure of $6,862,465,304,321,880 gives a gold price of $36,756.64 per gram or $1,143,259.40 per troy ounce. This is very expensive by current standards, but current standards do not come close to economizing the entire planet. The actual price would therefore be far lower than this, but this exercise is useful for setting an upper bound.

Current Prices

Perhaps critics of restoring sound money mean to say that the gold standard could not be reintroduced at current gold prices. In this, they are correct; at the time of this writing, gold trades at $1,284 per troy ounce. Multiplied by the 186,700 metric tons of gold available, this gives $7.707 trillion of gold-backed currency, which is not enough for the United States economy, let alone the entire world. The solution, then, is to devalue fiat currencies to fit the available gold supply. According to the CIA World Factbook, the gross world product in 2015 was $75.73 trillion. Covering this with the available gold gives a gold price of $12,616.75 per troy ounce, which is an order of magnitude above current prices, but not outlandish.

Possible Effects

Gold has gained several practical applications in recent times, particularly in medicine and technology. Critics claim that returning gold to monetary use would devastate these industries, along with the jewelry industry. In each case, critics are overreacting. Research toward creating substitutes which work nearly as well in electronics is promising. Gold salts in medicine have numerous side effects, monitoring requirements, limited efficacy, and very slow onset of action. Finally, there is no particular reason why we should care about an industry that produces impractical novelties to the extent of protecting it through fiat currency. It would be better to free up jewelers to do something more productive and helpful to others.

The other major criticism is that returning to a gold standard will cause a harmful episode of deflation. Paul Krugman writes,

“[W]hen people expect falling prices, they become less willing to spend, and in particular less willing to borrow. After all, when prices are falling, just sitting on cash becomes an investment with a positive real yield – Japanese bank deposits are a really good deal compared with those in America — and anyone considering borrowing, even for a productive investment, has to take account of the fact that the loan will have to repaid in dollars that are worth more than the dollars you borrowed.”

But those who are less willing to spend or borrow are necessarily more willing to save, which will allow them to spend more later or fund new businesses and investments. There is also the matter that one cannot hold out forever; one must eventually purchase goods and services. That the technology industry thrives despite producing the most deflationary goods shows that there is nothing harmful about this. It turns out that the value of using a current computer over the next year is worth more than holding out for a more powerful computer next year. It is also true that holding out for more food next month does not work if one cannot survive until then without food now. One may object that this would concentrate wealth in the hands of those who can hold out, but this is a feature rather than a bug because it redistributes resources to those who have been good stewards of resources.

Those who have already borrowed face a larger debt burden in a deflationary environment, and though creditors experience an equal gain, creditors are unlikely to increase their spending to offset the reduced spending of debtors. But again, this is a feature rather than a bug because it incentivizes saving over borrowing while pushing some debtors into default, thus punishing unwise lenders with loss of principal and unwise borrowers with bad credit ratings.

With falling prices, profits and wages usually have to fall as well. But profits are a function of prices and costs, which are also prices. This leaves profits largely unaffected on a percentage basis. Wages are prices as well, and the need to cut nominal wages in a deflationary environment could both incentivize firms to release their worst employees and provide pushback against minimum wage laws.

Finally, there is the belief that the sort of deflation that may be caused by returning to gold would cause a recession. But the above rebuttals deprive this problem of any mechanism by which it might occur. In fact, the empirical evidence suggests that deflation is linked to economic expansion, as occurred in the United States during the 19th century. The only period in which a correlation between deflation and depression does appear is the Great Depression (1929-34), and this may be linked to the central bank policies of the 1920s, which fraudulently inflated the money supply beyond the set gold exchange rates of the time.


While a free market in money would be the most desirable condition from a libertarian perspective, returning to a gold standard is a superior option to that of allowing fiat currency and central banking to continue as they are. The concerns about a lack of gold supply for returning to a gold standard are without merit, and the fears of deflation and devastation to industry are unfounded.

Tucker, Spencer, Libertarianism, and Fascism

On February 18, white nationalist and alt-right leader Richard Spencer was present in the bar of the Marriott hotel that hosted the International Students For Liberty conference. He was invited by the Hans-Hermann Hoppe Caucus, a group of right-libertarians with no official affiliation with SFL. A sign and the claims of several Hoppe Caucus members made it seem as though Spencer was an official part of the event, although he was not.

“We started the Hoppe Caucus with just a small group of people to spread diversity of conversation into the libertarian movement,” said Mitchell Steffen, founding member of the Hoppe Caucus. “We don’t agree with what Spencer believes in a lot of ways, but we still wanted to hear his point of view.”

For the better part of an hour, he and a small gathering of supporters, other listeners, and some SFL attendees engaged in political conversation in a peaceful and mostly quiet manner. Things got more raucous over time, then Jeffrey Tucker and others arrived to loudly denounce Spencer. Tucker left the scene, but those who came with him kept yelling, prompting hotel security to ask the entire crowd at the bar to leave. Spencer requested an escort out by hotel security, which they provided.

“It was really unfortunate how it turned out,” Steffen said. “I think the Hoppe Caucus did a good job of pushing the envelope and exposing hypocrisy though. Spencer’s ideas should be challenged with better libertarian ideas. He should not be bullied.”

The Exchange

First, let us analyze the exchange between Tucker and Spencer, transcribed below from the source video:

“JEFFREY TUCKER: I think fascists are not welcome at an anti-fascist conference! Not welcome! Students For Liberty is about human dignity, about liberty for all and not about fascism and that is what that man represents! You know the only reason you’re here is because of public accommodation laws; otherwise you’d be thrown out immediately, buddy.
RICHARD SPENCER: Oh, its Jeffrey Tucker! (unintelligible)
JT: (unintelligible) Yeah, this hotel, because you’re devaluing this property, my friend.
RS: Oh, really? By you, Jeffrey? I’m not sure you could throw out a fly, little Jeffrey. Hey Jeffrey, I used to read those articles by you, Jeffrey.
JT: Look, you don’t belong here. You absolutely don’t belong.
RS: Oh, I don’t belong here? What?
JT: You know why? Because we stand for liberty.
RS: Do you support the deep state, dude? That’s awesome.
JT: You stand for fascism, and you don’t belong here. Students For Liberty opposes everything that you stand for, buddy.
RS: You tweeted that you support the deep state over Trump. I think you might be a little fascist there, little Jeffrey.
JT: You are a troll. You can’t organize your own conference, so you come to our conference.
RS: That’s not an argument.
JT: You know the last time you tried, you had a bunch of losers in a room making Nazi salutes. That’s what happened at yours.
RS: That’s not an argument.
JT: So you come to our conference and troll us. If you were on Twitter right now, we’d all block you.
RS: I was invited by people here to come speak to them, Jeffrey.
JT: You are a liar! You are a liar! Fascists are liars! (exits)”


First, despite potentially misleading statements and signage made by the Hoppe Caucus, Spencer was not technically at the conference. He never went inside the part of the building reserved for the conference that required paid admission, but rather remained in a bar outside which was not reserved for ISFLC participants. Nor did Spencer himself claim to be part of the conference. Tucker is free to voice his opinion that fascists are not welcome at an anti-fascist conference, and although he does not officially speak for SFL, SFL released a statement in support of Tucker’s actions. However, the wisdom of such a position is questionable. The reaction of Tucker and his ilk is precisely why the alt-right is growing. Neutral observers see a fascist engaged in rational discussion while leftists angrily shout him down and cause a disturbance that gets the venue’s security involved, thus making the fascist seem reasonable by comparison.

Tucker then said that SFL is about human dignity, whatever that may mean, which means that it is not really about libertarianism. Libertarianism is a philosophical position on what constitutes the acceptable use of force. It says that initiating the use of force is never moral, but responding to an initiation of force with defensive force is always moral. Libertarianism says nothing about human dignity one way or another. In a libertarian social order, those who overindulge in vices, engage in criminal behaviors, and/or refuse to be productive people could very well find themselves living a life without dignity, especially if their particular community has a more socially Darwinian ethos. To be fair, Spencer is in the wrong here as well; while peaceful methods could partially achieve his stated goals, many of his goals could only be fully achieved by initiating the use of force.

Tucker claimed that Spencer would be thrown out if not for public accommodation laws and was devaluing the hotel’s property. It is impossible to know whether this is so because it is a counterfactual, but the fact that Spencer has been there several times beforehand without incident suggests otherwise. Ironically, Tucker used the pragmatic libertarian case against open borders to justify his outburst. Open state borders are a form of public accommodation, in that they require the force of government to prevent people from using their freedom of association and private property rights to exclude other people. He cannot be unaware of this inconsistency at this point, so we may reasonably conclude that Tucker is being malicious rather than simply ignorant. What is known is that chanting obscenities, as people accompanying Tucker did, diminishes the quality of experience for bystanders, thus devaluing the hotel’s property.

As an aside, one must wonder if Tucker would be so quick to denounce a similar figure who is of a protected class, such as a member of the Hotep movement, which is in many ways the black counterpart of the white nationalist alt-right. Perhaps inviting someone like Ali Shakur would be a more effective move at ISFLC 2018 than inviting Spencer. Then we could see whether Tucker would be consistent or would fear the social justice warriors around him calling him racist.

Spencer asked if Tucker supports the deep state over Trump, and suggested Tucker might be a bit fascist for doing so. This referred to a February 15 article by Tucker, arguing that however bad the establishment may be, Trump could be worse. While his analysis in that article is suspect, the only hint of fascism from Tucker is in his reaction to Spencer’s presence.

Libertarianism and Fascism

Tucker claimed that SFL stands for liberty while Spencer stands for fascism, and thus Spencer did not belong there. Let us examine the relationship between libertarianism and fascism, for there has long been a link between the two. Ludwig von Mises wrote favorably of fascism in 1927, saying,

“It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.”

Mises was prescient on the matter of how fascism in particular and reaction in general arises. There is no need to fix that which is unbroken, so a healthy social order will contain nothing to the right of conservatism, meaning the desire to maintain the status quo. Reactionary thought arises when a society makes a mistake and the social order becomes unhealthy, and fascism in particular arises as a response either to the threat of a communist takeover or to the suffering caused by socialism. Libertarianism and reaction are pieces of a whole, and libertarianism and fascism can work together in some circumstances because they share the common enemies of democracy, socialism, and communism. There is a danger here, as Mises would learn the hard way when fascists forced him out of his academic position in Vienna and away to America, but history clearly demonstrates that as bad as fascism can be, communism and socialism wreak more havoc.

The 1973 Chilean coup d’état led to another confluence between libertarianism and fascism. Before Augusto Pinochet took power, Chile was suffering from 140 percent annual inflation and contracting GDP under Marxist leadership. Pinochet was willing to listen to Milton Friedman’s students, and although the Chicago School of Economics is not as libertarian in disposition as the Austrian School, this led to an important series of market reforms and improvements in the mid-1970s and the 1980s known as the Miracle of Chile. These policies were continued after Pinochet’s rule ended in 1990, and the percentage of people living in poverty was reduced from 48 percent to 20 percent from 1988 to 2000. In 2010, Chile was the first South American nation to win membership in the Organization of Economic Cooperation and Development, an organization restricted to the world’s richest countries.

In more theoretical terms, if a private property owner under libertarian standards wishes to administer his estate after the form of a fascist dictatorship, it is his right to do so. Being the owner of the property means that he has a right to exclusive control over it, including its governance structure. However, he cannot force people to stay, so a libertarian fascist will have to be far less oppressive than statist fascists in order to keep his regime populated. This kind of governance, which offers people no voice and free exit, has proven best at limiting state power throughout history. It would also be best for limiting the tyranny of the private property owner that so concerns critics of libertarianism. This sort of libertarian fascism is not what Spencer advocates, but Tucker’s claim that fascism is necessarily opposed to libertarianism is both logically false and contradicted by the historical case of Pinochet’s Chile.

Trolling, Heiling, Blocking, Lying

Tucker claimed that Spencer came to ISFLC because he could not organize his own conference, then contradicted himself by referencing Spencer’s National Policy Institute Conference in November 2016 at which Spencer said, “Hail Trump! Hail our people! Hail victory!,” and several people in the audience responded with Nazi-style salutes. Though Spencer’s conference was much smaller (275 attendees versus 1,500+ attendees), Tucker’s claim is clearly false.

Tucker accused Spencer of being a troll and of lying about being invited to the venue. Spencer was not lying about being invited, as the Hoppe Caucus invited him and Spencer never went into the part of the building reserved for ISFLC where he was not invited. Whether Spencer is a troll or not is mostly a matter of opinion. He is not the most informed person, having been caught in numerous errors of fact throughout the years, but he was engaging in a peaceful discourse. Being offended was a choice made by Tucker and his ilk because Spencer was attracting enough attention to make the SFL establishment uncomfortable. It is telling that Tucker and company would resort to causing a disturbance and involving security forces because his side appeared to be losing in the marketplace of ideas that night.

Tucker said that if the confrontation had occurred on social media rather than in the physical world, then all ISFLC attendees would block him. This is another untestable counterfactual, but judging by the amount of people engaging with Spencer, Tucker’s claim stretches credibility.


The Hoppe Caucus released a statement on their Facebook page, saying,

“The Hoppe Caucus hosted Richard Spencer at ISFLC not because we were trying to start some kind of commotion, but rather an important dialogue. Hans-Hermann Hoppe invited him to his own Property and Freedom Society Conference several years ago for that very reason. After all, event organizers thought it would be a good idea to have leftists and even full-blown communists at the event as apart of the ‘big tent.’ So why not discuss the alternative right? Why not enlarge the tent a little bit further? Furthermore, who gets to define the tent? Is it the big money funders? Is it the oligarchs? Is it is the intellectual elite? Or is it the rank-and-file libertarians? These are all questions we should be pondering considering what happened this weekend.”

SFL has declared that “[t]hose responsible for the disruption have been identified, and are no longer welcome at Students For Liberty events.” Again, this is their right, but Spencer was not inside the event proper and attempting to silence Spencer and the Hoppe Caucus only makes them look like winners of the debate to a neutral observer.

Robby Soave demonstrated an ignorance of the facts of the case and libertarian principles, as well as political autism concerning group dynamics in his write-up of the matter. This would not be so notable, except that media outlets from Salon to The Blaze ran with his deeply flawed narrative. But this is to be expected, as accepting a narrative from someone else is easier than researching and thinking for oneself.

Overall, this incident illustrates why the libertarian moment seems to have passed and the alt-right movement continues to grow. Regardless of what one may think of Tucker, Spencer, fascism, or libertarianism, the tactics employed by Tucker and his ilk ensured that Spencer and fascism emerged victorious while the flawed application of libertarian ideas by those who either do not understand them or intentionally misuse them harmed the cause of liberty.